The U.K. Court of Appeal last week ruled that IBM had not breached the "duty of good faith" when making the decision to freeze its defined benefit plans to members.

In 2011, IBM transferred active members of the defined benefit sections into a defined contribution plan. The decision followed a series of other changes, which initially increased the member contribution rate for the contributory pension funds and a reduction in the accrual rate for the non-contributory DB plan. The assets of IBM non-U.S. pension plans stood at $36 billion as of Dec. 31. The U.K.-based plans' assets were not immediately available.

In 2005, the firm implemented a structure in which participants could either remain in the pension funds and continue accruing benefits, subject to agreements which would result in only two-thirds of future salary increases being pensionable, or transfer to the firm's DC plan but retain a final salary link in respect of past service DB benefits.

The court in its Aug. 3 decision overturned the decision of the High Court, which in April 2014 ruled that the multinational technology company did breach the implied "duty of good faith," a legal concept that assumes neither the employer nor employees should take steps that would destroy or seriously damage the relationship of trust and confidence between them.

An IBM spokeswoman said in an emailed statement that the firm "is pleased that the Court of Appeal has allowed our appeals and dismissed the appeals brought by the representative beneficiaries. In doing so, the court has upheld the reasoned business decisions IBM made to maintain (IBM's) competitiveness during the height of the 2008 financial crisis, and determined that changes made to our U.K. defined benefit pension plans were lawful."